Geoff Sullivan

Geoff is a technology marketer focused on the cloud infrastructure and software defined networking space. Geoff is an avid researcher and analyst of new technologies and is interested in blockchain use-cases beyond financial systems.

The Rise of the Evil ASIC

3 minute read

We’ve written before about the different types of cryptocurrency
miners that exist. Our Mining 101 highlights how GPU and CPU miners differ from
ASIC miners. Today we want to touch on some new trends and market developments
pertaining to mining technology and how some are leveraging it to manipulate the
blockchain markets.

An ASIC Refresher

A CPU is the most general purpose processor that exists. CPUs exist in personal
computers and servers to perform generic processing functions. A GPU on the other
hand, is a processor that was designed for a specific use case - computer
graphics and image processing. GPUs were originally created for gaming and
design/graphics applications, but It just so happens that the same characteristics
that make GPUs good for these applications (parallel processing), also make them
great at processing algorithms (in parallel.) As a result, GPUs make great
cryptocurrency miners. GPUs can be leveraged to mine most proof-of-work
blockchain assets with varying effectiveness based on the design of an asset’s
algorithm.

Now if a GPU is just a specialized CPU - An ASIC is an even more specialized
version. ASIC stands for Application-Specific Integrated Circuit. If a GPU is
good at processing algorithms, ASICs can be designed to process a specific
algorithm very well. Because of this, ASICs are only good at one thing and are
basically useless for any other use case. This main difference is the reason
that GPUs are mass produced and sold through traditional distribution channels,
whereas ASICs are typically built in smaller batches for very specific
use cases.

The role of ASICs in the Crypto Markets

If you’ve been following our story, you’ll know that the club’s first miners
were in fact, ASICs. The Moonlander 2 ASIC
was built specifically to mine Litecoin. That means the designer of the
Moonlander 2’s chip would have researched the design of Litecoin’s algorithm and
worked backwards to design a processor that would be ultra efficient at solving
it. This also means that the Moonlander 2 is only useful in mining Litecoin and
nothing else. This has been a growing trend in the cryptocurrency markets.
Recently, people have been designing ASICs to mine specific cryptocurrency assets
for their own use to have an advantage over other miners who are using GPUs to
mine the same coins. Because the ASIC is specifically designed to solve a coin’s
algorithm, it is able to do so more efficiently than a general purpose GPU.
This is, in a way, an example of market manipulation, and many are unhappy with
this new trend.

Countering ASIC-based Market Manipulation

Considering that ASIC design is specifically tied to a coin’s algorithm, the
only real way to counter this trend is to change a coin’s algorithm. You must
consider that designing and manufacturing an ASIC can be time consuming and
expensive. So when the very algorithm that an ASIC was designed to solve is
changed, it’s back to the drawing board for the ASIC designers, and all the
time, effort and cost that was put into the original ASIC is all for naught.

There are several recent examples of coins who forked to changed their
algorithms to deter ASIC-based miners. This movement is known as the Fairmining
Initiative. Just recently Sumokoin
and Monero
implemented hard forks deeming existing ASIC miners completely ineffective.
Coin’s that the club has been mining like TurtleCoin
and Worktips have either already changed, or are
changing algorithms the coming weeks. The Fairmining Initiative may be
effective in deterring the future design and manufacture of new ASIC miners.
It introduces risk to ASIC developers that all of the work required to
develop their miners will be wasted if a new hard fork is announced.

Editor's Note: Adam
The Fairmining Initiative may also create an arms-race for a more general
purpose ASIC capable of adapting to a number of different algorithms and be
able to handle changes to those algorithms on demand. This process is
similar to how GPUs over time evolved to become general purpose parallel
processing engines from simple pixel pushers of yore.

The Club’s Stance on the Evil ASIC

We think that mass adoption of ASICs to gain a mining advantage is generally
bad for the markets. Most of those who are designing and manufacturing these
ASICs are doing so for their own personal gain, and not to sell to other miners.

Furthermore, all of the time that the developer communities are spending on
countering this trend by forking projects and changing algorithms is taking
away from their work on project roadmaps - implementing new features and
growing the communities. We commend the hard work each of the aforementioned
projects have put into deterring this behaviour and hope that it will thwart
future attempts by these evil market manipulators.

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